Dear Martian, Pif would say, ours is a strange country because so many people speak and we often don't understand which side we're on in our ramshackle affairs, essentially if and how much we lose or even if we gain. How can this happen? Just dilate the reference time of an operation and everything magically adjusts. Let's try to understand each other better.
Those who had thought that, once the public intervention decree on the two Veneto banks had been approved with confidence, the heated climate of the affair would have eased a bit, quickly had to change their minds.
From that moment on, and in view of the launch of the parliamentary commission of inquiry into the Italian banking system, the press shifted their attention to the institutional implications of the affair, starting with the responsibilities of the supervisory authorities.
The political climate has become even more heated with the statements of those who were in government at the time, and who have now, in no uncertain terms, confessed, in a book that is very popular in the exceptional heat of this summer, that they badly placed his trust in those authorities. A head of government who says he was wrong about the governor!
In other countries it would be a question of an institutional clash of the highest level, with resignations made and accepted. Here it is easier for the buck to be resolved in a midsummer storm, unless the story finds a way to get even more entangled in the coming months, around the reconfirmation or otherwise of the tops of those authorities. What we would not like is that in the meantime other banking crises would break out, as is likely to happen.
Waiting to know the developments, what is striking is the "reading note to the decree" (which has recently become public domain), drawn up by the technical service of the Senate, in function of the conversion into law of the provision on Veneto banks. It contains, with analytical arguments, a series of doubts and perplexities about the merits and costs of the intervention.
Just to cite the more macroscopic observations, the study questions the excessively optimistic hypothesis of recovery of bad debts by the state to the extent of 47%. based on the experience gained in the case of the Sga del Banco di Napoli and on the statistics on the recovery of npl in Italy.
Mind you, the entire construction of the intervention is based on this hypothesis of recovery. If the average is 47, says the Senate study, the fluctuations around it go from 15 percent more and to 15 percent less, that is, from 62 to 32, with rates that, in the last two years, are approaching more to the lower ones than to the higher ones.
Then there are questions about the guarantees, the fiscal effects of the provision (reduction in revenue) and the elements on the basis of which the adequacy of the resources committed was estimated.
It seems strange that no trace of these perplexities can be found in the report to the decree and in the technical notes of the authorities, who have done their utmost ex post to explain their opportunity and convenience.
Returning to the forecasts of recoveries, one cannot fail to observe that the span of a decade to achieve the objective is equivalent, in finance, to a biblical time.
Furthermore, assume the results of the Banco di Napoli's SGA as virtuous benchmarks (assuming that we can speak of virtue when it comes to loans disbursed and managed for years with guilty tolerances and costing the Treasury over 12 thousand billion lire at the time), cannot make us forget that the recoveries mostly took place in the decade 1995/2005, when the values of the secured guarantees of the loans transferred nevertheless grew significantly following the real estate market and the changeover to the euro in 2002 produced further inflation , making redemptions in devalued currency easier.
Should we hope for another real estate bubble or another hidden inflation to have the reasonable certainty that the debtors of the two Venetian cities will assure us of the repayment of their debts to the extent envisaged in the public intervention project? Finally, few have tried to calculate the overall destruction of wealth caused by the two Venetian banks.
Between capital write-offs (11 billion), capital increases to cover 2014/15 losses (5 billion), cash charges for the Intesa intervention (5,3 billion), commitments for another 12, as well as other charges from estimated at a figure not far from a couple of billion, we arrive at the handsome amount of 35 billion. All against 40 billion in assets of the two liquidated banks. In terms of GDP, almost two percent.
Are we really sure that an atomistic liquidation would have created greater damage? It would be really difficult to explain all the behaviors to the hypothetical Martian who, unaware of everything, wanted to know how it went.
The more difficult question would be that of the rise in the final bill of banks that had been boiling for five years and that continued to simmer until it was no longer possible. But first we brought them to Europe as systemic and safe banks, then we brought them back to Italy, saying they were no longer systemic, so we tried to recapitalize them as a precaution, under European supervision, then we said they had to be liquidated in the Italian way . That is, with the money of savers, taxpayers and other banks.
And Europe withdrew in good order. And therefore, satisfied with having demonstrated that there was no state aid, when the state puts a lot of money into it, we cooked the dish for the Italian parliament: either eat the soup or skip the window. Finally, we also discovered that some of the institutions involved in the public decision-making process have doubts about the whole system.
How can we exclude that our Martian hasn't already shorted his evolved circuits? On the recovery times of non-performing loans left to the Italian state, Leonardo Sciascia came to mind when he said that the bank with its mortgages thirty years and more does metaphysics, going beyond the life of man.
We would not like the MEF to intend to make metaphysics with its recovery times for non-performing loans from a geological era. You will agree that we could not even appeal to the practical Anglo-Saxon advice of the wait and see. Because we will all be dead.
